Deferred Compensation Plan for Nonemployee Directors – Safeway Inc.

DEFERRED COMPENSATION PLAN FOR SAFEWAY

NON-EMPLOYEE DIRECTORS II

(Amended and Restated Effective January 1, 2011)

ARTICLE I

1.1 Introduction.

(a)

The name of this plan is the “Deferred Compensation Plan for Safeway
Non-Employee Directors II” (the “Plan”). Its purpose is to provide non-employee
Directors of the Company with increased flexibility in timing the receipt of
board service fees and to assist the Company in attracting and retaining
qualified individuals to serve as Directors. The Plan is effective as of January
1, 2005, and was amended and restated as of January 1, 2009, to comply with Code
Section 409A, and amended and restated again effective January 1, 2011. Between
January 1, 2005 and December 31, 2008, the Plan operated in good faith
compliance with the guidance issued under Code Section 409A.

(b)

The Plan is the successor plan to the Deferred Compensation Plan for Safeway
Non-Employee Directors (the “Prior Plan”). Effective December 31, 2004, the
Prior Plan was frozen and no new deferrals will be made under it; provided,
however, that any deferrals made under the Prior Plan before January 1, 2005
will continue to be governed by the terms and conditions of the Prior Plan as in
effect on December 31, 2004 or on the date of any later amendment, provided that
such amendment is not a material modification of the Prior Plan under Section
409A of the Code and regulations promulgated thereunder.

(c)

Any deferrals made under the Prior Plan after December 31, 2004 are deemed to
have been made under the Plan and all such deferrals are governed by the terms
and conditions of the Plan as it may be amended from time to time.

(d)

The Plan is intended to comply with the requirements of Section 409A of the
Code.

1.2 Definitions. Whenever used in this Plan, the following terms shall
have the meaning set forth below:

(a)

“Annual Fee” means the base annual fee payable to a Director for the
Director153s service as a member of the Board, as determined by the Board from
time to time, exclusive of any other fees, including, but not limited to, annual
fees for committee membership.

(b)

“Automatic Deferral” means the automatic deferral as described in Section 3.1
below.

(c)

“Board” means the Board of Directors of the Company.

(d)

“Closing Price” means the closing price of the Company153s Common Stock as
reported in The Wall Street Journal.

(e)

“Code” means the Internal Revenue Code of 1986, as amended.

(f)

“Common Stock” means the Common Stock, par value $.01 per share, of Safeway
Inc.

(g)

“Company” means Safeway Inc.

(h)

“Compensation” means all remuneration paid to a Director for services as a
Director other than reimbursement for expenses and shall include, but not be
limited to, Annual Fees and fees for committee membership.

(i)

“Director” means any individual serving on the Board who is not an employee
of the Company or any of its direct or indirect subsidiaries.

(j)

“Elective Deferral” means a Participant153s elective deferral as described in
Section 3.2 below.

(k)

“Participant” means a Director who receives Compensation from the Company in
any Plan Year.

(l)

“Plan Administrator” means a committee consisting of one or more senior
executives of the Company designated by the Chief Executive Officer of the
Company.

(m)

“Plan” means the Deferred Compensation Plan for Safeway Non-Employee
Directors II, effective as of January 1, 2005, and as amended thereafter.

(n)

“Plan Year” means the calendar year.

(o)

“Prior Plan” means Deferred Compensation Plan for Safeway Non-Employee
Directors.

(p)

“Separation from Service” or “Separates from Service” means termination of a
Director153s service as a non-employee member of the Board consistent with Code
Section 409A and the regulations promulgated thereunder.

ARTICLE II

2.1 Participation in the Plan. Any individual who is a Director as
defined in Section 1.2(h) shall participate in the Plan.

ARTICLE III

3.1 Automatic Deferrals.

(a)

Prior to the fourth calendar quarter of the 2007 Plan Year, payment of 50% of
a Director153s Compensation for each Plan Year shall automatically be deferred
under the Plan.

(b)

Beginning with the fourth calendar quarter of the 2007 Plan Year and for each
calendar quarter of a Plan Year thereafter, $5,000 of a Director153s Compensation,
and 50% of the balance of the Director153s Compensation for such calendar quarter
shall automatically be deferred under the Plan; provided, however, that
effective January 1, 2011, any increase in a Director153s then current Annual Fee,
plus the increase in the Directors153 Annual Fee for 2010, shall be automatically
deferred under the Plan, quarterly, in substantially equal amounts. Such
increase shall continue to be automatically deferred and shall not be eligible
for elective deferral under Section 3.2.

3.2 Election to Defer. Each Director may elect annually to have
payment of all or any portion of his or her Compensation, in excess of the
amount subject to the Automatic Deferral, for that Plan Year deferred. No
election to defer Compensation under this Plan may be made after December 31 of
the year preceding the Plan Year during which Compensation is earned. An
election to defer any Compensation shall be in writing and shall be delivered to
the Plan Administrator. An election to defer shall be irrevocable after the
beginning of the Plan Year for which the election is applicable and shall be
effective for the Plan Year or Plan Years immediately following the date on
which it was filed as set forth in the written election to defer. In the absence
of a written election to defer filed by a Director with the Plan Administrator,
his or her Compensation remaining after the Automatic Deferral will be paid
directly to the Director. Notwithstanding the foregoing, a Director who is first
appointed or elected to the Board in a Plan Year may elect to defer under the
Plan all or a portion of his or her Compensation, in excess of the amount
subject to the Automatic Deferral, with respect to such Compensation earned on
and after the first day of the month next following the date such Director
completes and returns the written election to defer to the Company, provided
that such election is made within 30 days after the date the Director is first
elected or appointed to the Board; such election, if made, shall be irrevocable
on the 31st day after such election or appointment or at such earlier date as
provided in the form.

3.3 Special Distribution Election.

(a)

At the time the Participant elects to defer Compensation in accordance with
Section 3.2, the Participant may elect that Compensation deferred pursuant to an
Elective Deferral will be paid in January of a specified year in the future that
is at least twelve months from the last day of the Plan Year in which the
deferred Compensation is earned; provided, however, that if the Participant
Separates from Service prior to such specified year,

the Participant153s account will be paid within 90 days following the
Participant153s Separation from Service.

(b)

Compensation deferred pursuant to an Automatic Deferral is payable only upon
the Participant153s Separation from Service.

(c)

A Participant who makes a special distribution election pursuant to Section
3.3(a) above may elect to amend such an election to further defer the payment,
provided that such election is made in writing and delivered to the Plan
Administrator at least twelve months in advance of the originally scheduled
special distribution date and the new distribution date elected by the
Participant is at least five years from the originally scheduled special
distribution date.

3.4 Transition Distribution Election. Notwithstanding any other
provision of the Plan to the contrary, a Participant may elect an in-service
account distribution or change the time of an in-service account distribution as
elected in accordance with Section 3.3 above, provided that the election is made
at least twelve months prior to the originally scheduled distribution date and
the election is made not later than December 31, 2006. An election made pursuant
to this Section 3.4 shall be treated as an initial special distribution election
and shall be subject to any administrative rules imposed by the Plan
Administrator including rules intended to comply with Section 409A of the Code
and Notice 2005-1, A-19. No election under this Section 3.4 shall (i) change the
payment date of any distribution otherwise scheduled to be paid in 2006 or cause
a payment to be paid in 2006, or (ii) be permitted after December 31, 2006.

3.5 Mode of Deferral. Payment of a Participant153s Compensation deferred
pursuant to an Automatic Deferral shall be deferred by means of a stock credit.
Payment of a Participant153s Compensation deferred pursuant to an Elective
Deferral may be deferred by means of a cash credit, a stock credit or a
combination of the two as the Participant shall elect in writing at the same
time as the election provided for in Section 3.2. If a Participant fails to make
an election as to the mode of deferral of his or her Elective Deferral, he or
she shall be deemed to have elected deferral by means of a cash credit. Cash
credits and stock credits shall be recorded in accounts established in
Participants153 names on the books of the Company.

(a)

Cash Credits. If the Elective Deferral is deferred wholly or partly by
means of a cash credit, the Participant153s cash credit account shall be credited,
as of the last day of the calendar quarter, with the dollar amount of
Compensation deferred during the quarter by means of a cash credit. As of the
last day of each calendar quarter, the Participant153s cash credit account shall
also be credited with an interest equivalent in an amount determined by applying
to the balance in the account as of the first day of the quarter (less any
distributions during the quarter) an interest rate for such quarter which, when
annualized, shall be the prime rate of Bankers Trust Company or such other
equivalent financial institution, as of the first

business day of the quarter. Interest shall be calculated on the actual
number of days in the quarter based upon a 360-day year.

(b)

Stock Credits. The Participant153s stock credit account shall be
credited, as of the last day of the calendar quarter with a Common Stock
equivalent equal to the number of shares of Common Stock (including fractions of
a share) that could have been purchased at the average of the Closing Price of
Common Stock on each business day during the last month of the calendar quarter
with the amount of the Compensation deferred during the quarter by means of a
stock credit. As of the date any dividend is paid to holders of Common Stock,
the Participant153s stock credit account shall also be credited with additional
Common Stock equivalents equal to the number of shares of Common Stock
(including fractions of a share) that could have been purchased at the Closing
Price of Common Stock on such date with the dividend paid on the number of
shares of Common Stock to which the Participant153s stock credit account is then
equivalent. In case of dividends paid in property, the dividend shall be deemed
to be the fair market value of the property at the time of distribution of the
dividend, as determined by the Plan Administrator.

3.6 Distribution of Credits.

(a)

If a Participant has elected payment in a specified year under Section 3.3,
distribution of his or her accounts will only be made in a single lump sum
payment. Otherwise, unless a Participant has elected to receive installment
payments as provided below or if the Participant fails to make any election with
respect to distribution of his or her accounts, payment of a Participant153s
accounts shall be made in a single lump sum within 90 days following the
Participant153s Separation from Service.

(b)

At the election of the Participant made in writing and delivered to the Plan
Administrator at the same time the Participant elects to defer Compensation in
accordance with Section 3.2, distribution of his or her accounts, commencing
within 90 days following the Participant153s Separation from Service, shall be
made in the number of annual installments elected by the Director not exceeding
ten. Any such election is irrevocable; provided, however, that with respect to
amount deferred in 2005 and 2006, a Participant may make a transition election
in accordance with Section 3.4.

(c)

Distribution of a Participant153s cash credit and stock credit accounts shall
be made in cash. The amount of the distribution for stock credit accounts shall
be determined by multiplying the number of shares of Common Stock attributable
to the distribution by the average of the Closing Price of Common Stock on each
business day in the month of December immediately prior to the Plan Year in
which the installment is to be paid.

3.7 Adjustment. If at any time the number of outstanding shares of
Common Stock shall be increased as the result of any stock dividend, subdivision
or reclassification of shares, the number of shares of Common Stock to which
each Participant153s stock credit account is equivalent shall be increased in the
same proportion as the outstanding number of shares of Common Stock is
increased, or if the number of outstanding shares of Common Stock shall at any
time be decreased as the result of any combination or reclassification of
shares, the number of shares of Common Stock to which each Participant153s stock
credit account is equivalent shall be decreased in the same proportion as the
outstanding number of shares of Common Stock is decreased. In the event the
Company shall at any time be consolidated with or merged into any other
corporation and holders of the Company153s Common Stock receive common shares of
the resulting or surviving corporation, there shall be credited to each
Participant153s stock credit account, in place of the shares then credited
thereto, a stock equivalent determined by multiplying the number of common
shares of stock given in exchange for a share of Common Stock upon such
consolidation or merger, by the number of shares of Common Stock to which the
Participant153s account is then equivalent. If in such a consolidation or merger,
holders of the Company153s Common Stock shall receive any consideration other than
common shares of the resulting or surviving corporation, the Participants153 stock
credit accounts shall be adjusted in accordance with the terms set forth in the
applicable consolidation or merger agreement, as interpreted by the Plan
Administrator.

3.8 Installment Amount. In the event a Participant has elected to
receive distribution of his or her accounts in more than one installment, the
amount of each installment shall be determined by multiplying the current
balance (denominated in cash units for the portion elected to be deferred as
cash credits and denominated in stock units for the portion deferred or elected
to be deferred in stock credits) in the accounts as determined under Section
3.5, by a fraction, the numerator of which is one, and the denominator of which
is the number of installments yet to be paid. With respect to cash credits,
interest shall continue to be credited in accordance with Section 3.5 during the
payment period. For purposes of the Plan, installment payments shall be treated
as a single distribution under Section 409A of the Code.

3.9 Distribution upon Death. In the event of the death of a
Participant, whether before or after ceasing to serve as a Director, any cash
credit account and stock credit account to which he or she was entitled, shall
be converted to cash and distributed in a single lump sum to such person or
persons or the survivors thereof, including corporations, unincorporated
associations or trusts, as the Participant may have designated. All such
designations shall be made in writing signed by the Participant and delivered to
the Plan Administrator. A Participant may from time to time revoke or change any
such designation by written notice to the Plan Administrator. If there is no
unrevoked designation on file with the Plan Administrator at the time of the
Participant153s death, or if the person or persons designated therein shall have
all predeceased the Participant or otherwise ceased to exist, such distributions
shall be made in accordance with the Participant153s will or in the absence of a
will, to the administrator of the Participant153s estate. Any distribution under
this Section 3.9 shall be made within 90 days following the date of the
Participant153s death. In this case, a Participant153s stock credit account shall be
converted to cash by multiplying the number of whole and fractional

shares of Common Stock to which the Participant153s stock credit account is
equivalent by the average of the Closing Price of Common Stock on each business
day during the last month of the calendar quarter prior to the date of death.

3.10 Prohibition on Acceleration. Notwithstanding any other provision
of the Plan to the contrary, no distribution shall be made from the Plan that
would constitute an impermissible acceleration of payment as defined in Section
409A(a)(3) of the Code and the regulations promulgated thereunder.

ARTICLE IV

4.1 Plan Administrator. The Plan Administrator shall have full power
and authority to administer the Plan including the power to promulgate forms to
be used with regard to the Plan, the power to promulgate rules of Plan
administration, the power to settle any disputes as to rights or benefits
arising from the Plan, and the power to make such decisions or take such actions
as the Plan Administrator, in its sole discretion, deems necessary or advisable
to aid in the proper maintenance of the Plan.

ARTICLE V

5.1 Funding. No promise hereunder shall be secured by any specific
assets of the Company, nor shall any assets of the Company be designated as
attributable or allocated to the satisfaction of such promises. In addition,
amounts deferred pursuant to the terms of the Plan and income attributable to
such amounts shall remain (until distributed in accordance with the terms of the
Plan) solely the property of the Company, subject to the claims of the Company153s
general creditors.

ARTICLE VI

6.1 Non-alienation of Benefits. No benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge; and any attempt to do so shall be void. No such
benefit shall, prior to receipt thereof by the Participant, be in any manner
liable for or subject to the debts, contracts, liabilities, engagements, or
torts of the Participant.

6.2 Domestic Relations Orders. If a court of competent jurisdiction
determines pursuant to a judgment, order or approval of a marital property
settlement agreement that all or any portion of the benefits payable under the
Plan to a Participant constitute community property of the Participant and his
or her spouse or former spouse (hereafter, the “Alternate Payee”) or property
which is otherwise subject to division by the Participant and the Alternate
Payee, a division of such property shall not constitute a violation of Section
6.1, and any portion of such property may be paid or set aside for payment to
the Alternate Payee. The preceding sentence of this Section 6.2, however, shall
not create any additional rights and privileges for the Alternate Payee (or the
Participant) not already provided under the Plan; in this regard, the
Administrator shall have the right to refuse to recognize any judgment, order or
approval of a marital property settlement agreement that the Administrator in
its sole discretion determines

provides for any additional rights and privileges not provided under the
Plan, including without limitation provisions relating to form and time of
payment.

ARTICLE VII

7.1 Delegation of Administrative Duties. Administrative duties imposed
by this Plan may be delegated by the Plan Administrator or the individual
charged with such duties.

7.2 Governing Law. This Plan shall be governed by the laws of the
State of Delaware. The Plan is intended to comply with Code Section 409A and
shall be interpreted as necessary to comply with Code Section 409A. Any
provision that does not comply with Code Section 409A shall be void or deemed to
be amended to comply with Code Section 409A.

7.3 Amendment, Modification and Termination of the Plan.

(a)

The Plan Administrator may amend or modify the Plan at any time and in any
respect.

(b)

The Board may terminate and liquidate the Plan on a completely voluntary
basis if: (1) the termination does not occur proximate to a downturn in the
financial health of the Company, (2) all nonqualified plans that are aggregated
as a single plan with the Plan (pursuant to Code Section 409A) are terminated,
(3) no payments are made within the first 12 months following termination, other
than payments that would have been payable under the terms of the Plan if the
Plan had not been terminated, (4) all payments are made within 24 months of the
termination and (5) a new plan that would be aggregated with the Plan (pursuant
to Code Section 409A) is not established for a period of three years following
the date of termination of the Plan.

(c)

The Board may terminate the Plan upon a dissolution of the Company that is
taxed under Code section 331 or with the approval of a bankruptcy court pursuant
to 11 U.S.C. section 503(b)(1)(A), provided that the deferred amounts are
distributed and included in the gross income of the Participants by the latest
of (i) the calendar year in which the Plan terminates or (ii) the first calendar
year in which payment of the deferred amounts is administratively practicable.

[Signature Page Follows]

IN WITNESS WHEREOF, the Board has caused this amended and restated Plan to be
executed by a duly authorized officer of the Company this 20th day of October
2010.


SAFEWAY INC.

By:		/s/ Laura A. Donald

Its:		Assistant Vice President

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